Share repurchases are often mentioned as part of a capital allocation decision along with investments in the business. Investments add value if they can generate residual income (value added). Repurchases do not add value if the shares are repurchased at fair value (zero residual income added). So, a repurchase is an alternative to investment only if (i) the firm has no investment opportunities with positive expected residual income or (ii) repurchases can be made with value added2M the stock is trading cheap, at less than value.
A firm with no value-added investment opportunities can make a repurchase at fair value, for shareholders may have value adding investment opportunities on personal account that the firm does not have. But repurchases can lose value if made at prices higher than fair value. Activist shareholders who have investment opportunities sometimes advocate for share repurchases but can hurt other investors in their desire for cash if repurchases are at a high price.